Mon | May 29, 2017

Taking from Peter to pay Paul (IMF)

Published:Sunday | July 26, 2015 | 7:00 AM
Mike Henry
Crewmen repair a section of Caledonia Avenue, Cross Roads, days before the arrival of United States President Barack Obama in April. Guest columnist Mike Henry said tens of millions of dollars is still owed to contractors for the work done.
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It is no real surprise that the Government of Jamaica has been making much ado about the passing of nearly nine consecutive International Monetary Fund (IMF) quarterly tests under the four-year extended fund facility with the multilateral lending agency.

This is because only recently has it seemingly come home to the administration's knowledge that the personal cost to many Jamaicans, especially from within the lower socio-economic groupings, for the good-looking IMF test results, has been nothing short of sheer hell.

However, it is becoming quite clear to those with ears close to the ground within the public infrastructure (works) fraternity that it is not just the mass of poorer Jamaicans who are being squeezed to a pulp, just so the IMF can continue to put ticks in the right column on the Government's report cards.

From mysterious huge fee hikes for many government services, to similarly huge cutbacks in Capital A funding for public infrastructure projects, the obviously desperate efforts of the Government to meet the fiscal requirements of the IMF have been chronicled across the media.

 

realities among some contractors

 

But how much is known of the more recent experiences of top-level contractors across the country who have been 'fortunate' enough to have secured work from the now much more limited number of infrastructure contracts under the vice-like dictates of the IMF that the Government is now seeking, through the back door, to get some relief from? How much is known of the realities among some contractors who are being viewed by their less fortunate peers for at least having something doing amid all the cuts in Capital A spending over the last two years?

How does one accurately describe the contrasting circumstance of business operators who are really happy to be numbered among those holding meaningful Government infrastructure contracts, but utterly frustrated at being now constantly owed for inordinately long periods of time, based on the very limited fiscal space available under the ultra-stringent IMF dictates or - better said - decrees?

While they will not publicly vent their highly frustrating circumstances, out of fear of possible blacklisting, they are not able to hide the financial implications of being collectively owed billions of dollars for inordinately long periods without even a clear picture of when the relevant payments are likely to be made. These implications include not being able to meet many of their business obligations, including adequately and timely meeting of wage bills, and securing and paying for work materials on schedule.

When single contractors have close to and above $1 billion outstanding for what is described as "much too long", that spells really bad business for the firms involved, both upstream and downstream. In simple terms, it represents nothing short of economic exploitation of the local building contractors and, by extension, the workers they employ, especially the most vulnerable labourers at the lower rung of the employment ladder.

 

ECONOMIC GYMNASTICS

 

Via what could be aptly described as economic gymnastics, the Government, through the Ministry of Transport, Works and Housing, continues to fail to pay most of the contractors. And for those fortunate enough to get a little respite here and there, it's a matter of transferring credit from one contractor to another, in essence, taking from Peter to pay Paul, a situation that is most likely to lead to the bottom falling out of the proverbial bucket.

Now even the National Works Agency (NWA) is reported to be enjoying significantly fewer credit options than before, apparently because of the strain on its credibility in fulfilling its financial obligation.

And on that note, believe it or not, after all the public-relations benefit that the administration milked from the Obama visit in April, contractors who were called upon almost overnight to redo roadways that the president didn't end up driving on are still wondering when they are going to be fully paid for the 'emergency' works that were effected.

Note that the emergency works on the presidential assignment involved the NWA and private contractors, and involved securing material at very short notice and consequently at higher costs than normal, and the employment of labour on a 24-hour basis, again, at higher than normal costs. Yet to date, only around a half of the overall amount has been paid.

 

JEEP STILL PARKED

 

Note also that the much-vaunted Jamaica Emergency Employment Programme (JEEP) has remained parked for some time now, and seemingly can't be driven until payments are made for outstanding retention of services and fluctuations on many projects, including the Jamaica Development Infrastructure Programme.

It seemed to have been the case where the works ministry misled itself and used funds that were for the payment of some outstanding amounts to building contractors, to false-start the last drive-out in the JEEP, resulting in ultra-late payments on other major projects, and now, slowness on the part of some contractors in coming forward for some projects, and threats to shut down some of the existing projects.

Should it, therefore, be any wonder that the Government is finally now tacitly admitting the failure of its 'best-ever agreement' with the IMF, which has had no connection with the highly elusive economic growth factor that Jamaicans have so yearned for over recent years? Is the price for continued IMF test passes overvalued when taken in the context of the exploitation of Jamaican contractors, workers and the population in general?

Following this outline, the next logical and responsible step is for the media to discreetly talk with the local building contractors to the Government to get a first-hand perspective of how bad the situation has become among the service providers. After all, if the present situation is to continue for long, as a country, it may be very long before we produce the growth that we all would like to see for Jamaica's sake.

- Mike Henry is MP for Central Clarendon and opposition spokesman on transport and works. Email feedback to columns@gleanerjm.com.